By 2016 mobile phone users will be consuming ten times as much data as today – unfortunately much of this boost will not be lining mobile operator’s pockets.
According to a new report by Informa, users will consume 6.5 times as much video, over eight times as much music and social media, and nearly 10 times as much on videogames. They will also be browsing six times as many web pages and downloading 14 times as many megabytes of applications on their handset as in 2011.
Unfortunately for mobile operators, many of these services operate ‘over-the-top’ (OTT) – providing revenues to 3rd party operators, or for free – depriving mobile operators of revenue (i.e. Apple’s iMessage) as all data tends to be lumped into simple data plans. Operators aren’t allowed to charge for specific types of content under net neutrality rules.
"The top three data guzzlers on mobile phones over the next five years will be applications, video streaming and web browsing – in that order of importance," says Guillermo Escofet, senior analyst at Informa Telecoms & Media.
"Yet, the top revenue earners in 2016 will be web browsing first, followed by P2P SMS and applications. Video streaming will represent less than 1% of mobile data revenue in 2016, despite hogging a third of handset traffic."
This huge growth in traffic will far outstrip the growth in revenues. Globally, mobile data traffic will grow from 3.89 trillion megabytes in 2011 to 39.75 trillion megabytes by 2016. However, while traffic will rise 10 fold, operator revenues will only double – from US$325.8bn to just US$627.5bn in that time.
Alongside these facts, the percentage revenue kept by the operators will also shrink. Text (SMS) and picture (MMS) messaging traffic will fade into irrelevance – a problem for mobile operators who retain a monopoly of service on these revenue streams, and have long used them as high margin cash cows.
Usage of web based messaging services, such as instant messaging and e-mail, will also see higher growth. The global monthly average for mobile instant messages is currently 31 – it will be 118 by 2016.
Excluding basic data and text messaging and the percentage margin for operators on all other data services will drop from 56% in 2011 to 41% in 2016.
UK operators in particular are still paying for the high prices extracted from the 3G spectrum auction war in the early 2000s, which produced a poor ROI for operators. The incumbents have been holding off 4G ever since.
